Ease of Movement

Ease of Movement was developed by Richard W Arms and performs a similar function to Equivolume charts. It highlights the relationship between volume and price changes and is particularly useful for assessing the strength of a trend.

The indicator shows:
High positive values when prices move upward on light volume;
High negative values when prices move down on light volume;
Low values if price is not moving or if it takes heavy volume to move prices, signaling distribution or accumulation.

Trading Signals :

Signals are normally taken from an exponential moving average plotted on the Ease of Movement indicator. They are more effective in a trending market.
Go long when Ease of Movement crosses to above zero (from below).
Go short when Ease of Movement crosses to below zero (from above).

Example :

Coca Cola Corporation plotted with Ease of Movement indicator smoothed by a 10 day exponential moving average.



Go long [L]: Ease of Movement crosses to above zero.
Go short [S]: Ease of Movement crosses to below zero.
Go long [L]: Ease of Movement crosses to above zero.
Go short [S]: Ease of Movement crosses to below zero.
Go long [L]: Ease of Movement crosses to above zero.
Go short [S]: Note that we are whipsawed more frequently in a ranging market.


Setup :

The Ease of Movement default is set at 10 days smoothing by an exponential moving average. To alter the default settings - Edit Indicator Settings.

See Indicator Panel for directions on how to set up an indicator.

What Does Ease Of Movement Mean?

A technical momentum indicator that is used to illustrate the relationship between the rate of an asset's price change and its volume. This indicator attempts to identify the amount of volume required to move prices. Generally a value greater than zero is an indication that the stock is being accumulated (bought) and negative values are used to signal increased selling pressure. A high positive value appears when prices move upward on low volume. Strong negative numbers indicate that price is moving downward on low volume.



Investopedia explains Ease Of Movement:

A moving average of the indicator can be added to act as a trigger line, which is similar to other indicators like the MACD. Transaction signals can be generated when the indicator crosses over a 9-day moving average, but are generally made when the indicator crosses over the zero line. Traders use the smoothed version of this indicator in an attempt to eliminate false signals.